In the relentless pursuit of growth within the private equity sector, portfolio companies are constantly exploring innovative ways to scale, improve productivity, and increase market penetration. One of the most promising avenues for achieving these goals is through the adoption of a digital intelligent workforce, specifically Robotic Process Automation (RPA) and Artificial Intelligence (AI). These technologies are transforming the business landscape, offering unprecedented opportunities to streamline operations, enhance efficiency, and drive growth.

The Italian CPA Market: A Case Study in Transformation

Let’s consider the Italian accounting software market in CPA firms and small businesses. This market, invested in by two renowned private equity funds, has indirectly benefited from market disruption brought about by innovative startups in the digital intelligent workforce. One such company, Mentally, has produced digital robots based on AI and RPA, attracting a significant number of customers from the private equity portfolio company competitors. This is a success story, a clear example of how a digital intelligent workforce can serve as a catalyst for growth in private equity portfolio companies, particularly within regional markets. 

Traditional Private Equity Growth Strategies: The Need for a Shift

Typical private equity growth strategies for portfolio companies often involve identifying a company with a brand that can increase both its customer base and revenue per customer, identifying partnerships in the marketing and sales channel to accelerate growth, or acquiring incumbent companies to acquire new customers and, ideally, leverage synergies by upselling them on more products. However, these strategies often lack a product-centric approach that improves the product-market fit and anticipates market trends to position the company for dominance in the marketplace.

The Limitations of Traditional Strategies: The Need for a Product-Centric Approach

The Italian CPA market, for instance, is characterized by sub-par software quality and relatively low competition. Barriers to exit in this market are high because CPA firms are reluctant to change their software. The incumbent strategy is based on offering discounts and financial services to facilitate adoption and offering a portfolio of services that appear to enhance  product differentiation but  are actually unable to solve  specific market problems. A more product-centric strategy is required for sustained growth.

The Power of a Product-Centric Strategy

Most incumbent companies in the market neglect operational problems and the cost of operations for CPA firms. They focus on legislative compliance but do not address deeply the specific challenges that CPA firms face today, such as a general shortage of qualified personnel. Those who want to win in this market need to innovate with a product-centric solution.

Mentally: A Solution Based on Emerging and Unsatisfied Needs

Mentally is leveraging a new breed of robotic process automation. This new technology and product strategy address a set of latent problems in the market, namely problems around business productivity and the ability for CPA firms to increase their profitability. Partnering with Mentally’s intelligent robots products can be a win-win for portfolio companies focusing on software for process-intensive industries because it allows them to bring additional core benefits to their customer base.

The Replicability of Mentally’s Success

Mentally’s approach can be reproduced in other regional markets and verticals. Whenever a software application from a portfolio company can be augmented by a digital robot, prospective customers will certainly appreciate the synergistic benefits of such integration. Mentally has developed a wealth of experience with high return on investment robots, producing results with the low budgets typically available in the Italian regional market, and training SMBs. The company is now seeking opportunities to reproduce this approach with other business partners around the world.

An Invitation to Explore Mentally’s Solutions

As we look to the future, it’s clear that a digital intelligent workforce offers a compelling pathway for accelerating growth in private equity portfolio companies. By leveraging technologies like AI and RPA, these companies can disrupt business processes, increase productivity, and drive growth. As the success of Mentally illustrates, the key to this approach is a deep understanding of specific industries and customer personas, combined with expertise in AI, user experience, and business process design. This combination can help private equity portfolio companies reach their full growth potential.